Correlation Between TOTAL GABON and Air New
Can any of the company-specific risk be diversified away by investing in both TOTAL GABON and Air New at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TOTAL GABON and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOTAL GABON and Air New Zealand, you can compare the effects of market volatilities on TOTAL GABON and Air New and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TOTAL GABON with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and Air New.
Diversification Opportunities for TOTAL GABON and Air New
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TOTAL and Air is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and TOTAL GABON is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TOTAL GABON are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of TOTAL GABON i.e., TOTAL GABON and Air New go up and down completely randomly.
Pair Corralation between TOTAL GABON and Air New
Assuming the 90 days trading horizon TOTAL GABON is expected to generate 1.03 times more return on investment than Air New. However, TOTAL GABON is 1.03 times more volatile than Air New Zealand. It trades about 0.04 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.01 per unit of risk. If you would invest 15,132 in TOTAL GABON on September 4, 2024 and sell it today you would earn a total of 3,218 from holding TOTAL GABON or generate 21.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOTAL GABON vs. Air New Zealand
Performance |
| Timeline |
| TOTAL GABON |
| Air New Zealand |
TOTAL GABON and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOTAL GABON and Air New
The main advantage of trading using opposite TOTAL GABON and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON position performs unexpectedly, Air New can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Air New will offset losses from the drop in Air New's long position.The idea behind TOTAL GABON and Air New Zealand pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Air New vs. KENNAMETAL INC | Air New vs. Hyster Yale Materials Handling | Air New vs. Goodyear Tire Rubber | Air New vs. LION ONE METALS |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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